10-QPeriod: Q2 FY2010

CROWN CASTLE INC. Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 6, 2010For Securities:CCI

Summary

Crown Castle Inc. (CCI) reported its Q2 2010 results, showing an increase in net revenues driven by site rental income, which grew by 8% year-over-year in the CCUSA segment. While the company generated significant operating income, it reported a substantial net loss attributable to CCIC stockholders. This loss was heavily influenced by significant financial adjustments, including large net losses on interest rate swaps and substantial debt refinancing activities. Despite the reported net loss, the company highlighted its stable cash flow generation from operations, which exceeded interest payments and capital expenditures. Management emphasized continued investment in land purchases and opportunistic stock buybacks, supported by recent financing that extended debt maturities. The company's strategic focus remains on leveraging the growth in wireless services and network expansion. Despite economic uncertainties, CCI anticipates continued growth in site rental revenues, projecting an 8-9% increase from 2009 to 2010. The company also noted its commitment to maintaining a strong capital structure, targeting a long-term leverage ratio of approximately five times Adjusted EBITDA. Upcoming events include an expected acquisition of NewPath Networks, Inc. for $115 million, which will expand its distributed antenna system (DAS) network, and a planned $1.55 billion offering of senior secured notes to refinance existing debt.

Financial Highlights

47 data points
Beta

Revenue

$456.13M

Net Income

-$97.53M

-21.4% Net Margin

EPS (Diluted)

$-0.36

Total Assets

$10.35B

Cash & Equivalents

$242.09M

Free Cash Flow

$163.95M

Financial Statements
Beta
Revenue$456.13M
SG&A Expenses$40.56M
Operating Expenses$323.24M
Operating Income$132.88M
Interest Expense$101.67M
Net Income-$97.53M
EPS (Basic)$-0.36
EPS (Diluted)$-0.36
Shares Outstanding (Basic)286.08M
Shares Outstanding (Diluted)286.08M

Key Highlights

  • 1Net revenues increased by 11% year-over-year to $456.1 million for the quarter, primarily driven by a 8% increase in site rental revenue.
  • 2Despite strong operating income, the company reported a net loss attributable to CCIC stockholders of $97.5 million for the quarter, impacted by $114.6 million in net losses on interest rate swaps.
  • 3Operating cash flow for the six months ended June 30, 2010 was $248.2 million, indicating continued stable cash generation.
  • 4The company repurchased $138.2 million of its common stock in the first half of 2010 and plans to acquire NewPath Networks for $115 million.
  • 5Long-term debt of $6.37 billion was maintained, with significant refinancing activities completed in late 2009 and early 2010 to extend maturity profiles.
  • 6The company expects site rental revenue growth of 8-9% from 2009 to 2010, driven by wireless network expansion and demand for new technologies.
  • 7Adjusted EBITDA increased by 13% to $280.1 million for the quarter, demonstrating underlying operational performance.

Frequently Asked Questions

The primary driver of Crown Castle's revenue is site rental income from leasing antenna space on its towers. For the three months ended June 30, 2010, site rental revenues increased by 8% year-over-year to $409.6 million, reflecting continued demand from wireless carriers for network expansion and new technologies.

The company reported a net loss attributable to CCIC stockholders of $97.5 million for the quarter. This was significantly impacted by large, non-operational financial adjustments, including a $114.6 million net loss on interest rate swaps and costs associated with debt refinancing activities. These items overshadowed the operational performance indicated by Adjusted EBITDA, which grew by 13%.

Crown Castle has actively managed its debt by completing significant refinancing activities in late 2009 and early 2010 to extend maturity dates and reduce near-term refinancing risk. As of June 30, 2010, the company had $6.37 billion in long-term debt. It maintains substantial liquidity with $242.1 million in cash and cash equivalents and $400 million in undrawn revolver availability. The company also generates stable operating cash flow, which is expected to cover upcoming debt service and capital expenditures.

Crown Castle anticipates continued growth in site rental revenues, projecting an 8-9% increase from 2009 to 2010, driven by ongoing wireless industry expansion, new technologies, and increasing smartphone penetration. Strategic initiatives include the planned acquisition of NewPath Networks to expand its distributed antenna system (DAS) business and further debt refinancing to optimize its capital structure and ensure long-term shareholder value.